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Jim Balsille Ends Bid To Buy The Penguins

Canadian billionaire Jim Balsillie today withdrew his offer to buy the Penguins after he and the National Hockey League reached a stalemate over terms in a last-minute consent agreement.

Among the NHL's several stipulations, sources close to the sale process said, are that Mr. Balsillie promise to keep the club in Pittsburgh regardless of the arena situation, and that he agree to contingencies for the NHL to step in and take over ownership or management of the team.

After receiving Mr. Balsillie's notice of termination, Penguins president and CEO Ken Sawyer said there was no dispute between Mr. Balsillie and the team. He declined to comment on what led to the withdrawal but confirmed there were "a number of points" of disagreement.

"There's a lot of work that's gone into it," Mr. Sawyer said. "It was almost there, and now it's not there."

The timing of the sale's breakdown could be critical, as gaming officials are scheduled to award the state's licenses for stand-alone slots casinos Wednesday. The prospects for a facility to replace Mellon Arena are tied to that announcement.

Mr. Sawyer said the Penguins will re-evaluate their sale process after that announcement.

The Penguins have a contract with Isle of Capri, which will provide $290 million toward construction of a new arena if it gets the license to build a casino in Uptown and ensure that the team stays.

If the license goes to one of the other two finalists, Forest City Enterprises or PITG Gaming LLC, the Penguins would be left to negotiate an alternate funding arrangement under what state officials have called Plan B. Initial plans call for the team to put up $8.5 million up front, plus about $4 million a year for 30 years, with contributions also coming from the state and casino owner.

If a buyer for the Penguins honors a consent agreement with the league to keep the team here under any circumstances, it might undermine their negotiating leverage if Plan B comes into play.

"There's no question there's a degree of uncertainty back here again, which makes the decision on Wednesday absolutely critical," Mr. Sawyer said. "If Isle of Capri should win, then the team's here and all that is settled. If they don't, then we'll just have to evaluate where we are at that point in time."

Mr. Sawyer declined to speculate whether the current ownership, which includes Hall of Fame player Mario Lemieux, might reconsider selling the team if Isle of Capri gets the license, thus settling the team's future.

The NHL did not return a phone call, and a spokesman earlier this week said the league does not comment on sale and approval processes.

Mr. Balsillie was not available to elaborate. It is not known whether he might reinstate his offer, believed to be for about $175 million, if the league softens some language in the consent agreement.

Mr. Balsillie is chairman and co-CEO of Research in Motion, the company based in Waterloo, Ontario, that makes and markets the popular wireless Blackberry devices. He signed a purchase agreement with the Penguins Oct. 4 and was interviewed by the executive committee of the NHL's board of governors Dec. 2.

He apparently was on the verge of closing on the sale late last week or early this week when he received the consent agreement and declined to sign it.

On Wednesday, Mr. Balsillie was in Harrisburg being interviewed by the state Gaming Control Board, and today the local Sports and Exhibition Authority voted to approve the transfer of the Mellon Arena lease to Mr. Balsillie from the Lemieux Group.

If Mr. Balsillie does not reinstate his offer, it's likely that earlier bidders will re-enter the picture.

If I had the money, I would definitely buy the Pens and finance for a new arena. Believe me, I would figure out someone to sponsor the lease of the new place. I would love to see Iron City Arena or USS Steel Arena

They are by far the best bang for the buck in the league and the team with the brightest future on the ice, if the Isle of Capri wins the slots (doubtful) I would imagine they would be a very easy sell

"Racing doesn't teach a lesson. Nor do most racers. Many of them can't even tell you why they're in the cockpit. They don't know. Racing isn't what they do. It's who they are."

Canadian billionaire Jim Balsillie insisted Friday that his $175 million bid to buy the Penguins remains alive, despite a statement from team owner Mario Lemieux that the deal is off.

"Right now, I'm not giving up on anything," said Balsillie, who was hosting a Christmas party last night at his home in Waterloo, Ontario. "I wish it could move forward."

In a statement released by the team, Lemieux said Balsillie "delivered a notice of termination (to the NHL) today, and it is our understanding that he has stopped negotiating with the National Hockey League to get the necessary consent to buy the Pittsburgh Penguins."

Balsillie didn't confirm or deny that he delivered such a notice. Asked if the deal was dead, he said: "No, nothing's ever dead for good. Sometimes, you get surprised by things. I have to wait for the next step. I really can't say anything more."

The surprising turn of events comes as the Penguins near a critical point in their quest for a new arena.

On Wednesday, the state Gaming Control Board plans to vote to award the $50 million casino license for Pittsburgh. Isle of Capri Casinos, one of three bidders, has agreed to pay $290 million for an arena if it wins the license for an Uptown slots parlor.

Two days ago, Balsillie told the board he was determined to keep the team in Pittsburgh, even if Isle of Capri loses. However, he said the backup plan for an arena, often referred to as "Plan B," is no more than "a concept."

Mayor Luke Ravenstahl said he heard "over and over again" last night that "the NHL wanted to put in a provision to ensure that the Penguins stayed in Pittsburgh, and Mr. Balsillie didn't want to agree to that."

If that is the case, Ravenstahl said, the development could be a blessing.

"If Mr. Balsillie has a lack of commitment to Pittsburgh, this perhaps would be a good thing. I am confident we can still put a deal in place to keep the team here.

"We will continue to move forward with our discussions on how to keep the team in Pittsburgh, either with the Isle of Capri or Plan B."

The NHL board of governors was in the midst of voting on Balsillie's offer for the team when the news broke. League spokesman Frank Brown declined comment on whether the deal is terminated.

NHL Commissioner Gary Bettman released the following statement: "Today's development was unfortunate. If the Isle of Capri is not granted the license on Wednesday, then an already difficult and volatile situation will be aggravated. It is imperative that the Penguins have a new arena on economic terms that make sense for the franchise for the team to remain in Pittsburgh."

At least two of the bidders who were beaten out by Balsillie on Oct. 5 are ready to get back in the game, assuming Balsillie is out and Lemieux doesn't choose to keep the franchise.

In the second part of his statement, Lemieux said his ownership group would "re-evaluate our situation" after the slots license is awarded.

Team president Ken Sawyer said, "I think Mario would like to sell his interest."

Sawyer said he didn't know why Balsillie's deal broke down but that the financial terms were not the problem.

Asked if an Isle of Capri victory might induce additional investors to step forward for the current group, Sawyer said, "No doubt."

Balsillie's competitors included Hartford real-estate developer Sam Fingold; New York businessman Andrew Murstein; and Ohio businessman Jim Renacci, a Ringgold High School graduate.

"You can't get too excited yet, because you don't know all the details and how it's going to play out," Murstein said. "But we've always said we were committed to Pittsburgh. We'd certainly be interested again if the team came back on the market."

In July, it looked as if Fingold would win when he signed a letter of intent to buy the team, but his bid fell through. Asked last night if he remains interested, Fingold said, "Absolutely."

Fingold said he wasn't surprised, given his experience in trying to consummate a deal with the NHL, that Balsillie's bid stalled.

"Not at all," he said. "I was very close. That's why I'm not surprised."

Fingold declined to elaborate. Renacci couldn't be reached for comment.

In August 2005, a bid by San Jose, Calif., venture capitalist William Del Biaggio III fell apart.

Much attention now will turn to Mt. Lebanon native Mark Cuban, owner of the NBA's Dallas Mavericks. On a visit to Pittsburgh for an NBA exhibition game in October, Cuban said he made "a big mistake" by not trying to buy the Penguins.

On his blog (www.blogmaverick.com), Cuban wrote, "There are only so many hours in the day, and I didn't have the time or the expertise in hockey to do it right. My mistake."

Cuban was part of Murstein's original team but didn't have a significant financial stake and wouldn't be part of another Murstein bid. Cuban didn't return an e-mail request seeking comment last night.

Isle of Capri spokesman Les McMackin said his group is committed to building a new arena if it wins the slots license, no matter who owns the team.

"Our deal is structured in a way that transcends the ownership of the team," McMackin said. "Whoever buys the team is bound by our agreement with the team. Our deal provides certainty as to the Penguins' staying in Pittsburgh."

Allegheny County Chief Executive Dan Onorato released a statement that said, "While news of Mr. Balsillie's decision to withdraw his offer to purchase the Pittsburgh Penguins comes as a surprise, our goals remain the same -- to build a new multipurpose arena and to keep the Penguins here in Pittsburgh for a long time."

Earlier yesterday, the Sports & Exhibition Authority approved Balsillie's pending purchase. The authority's approval is required to sell the team under the terms of the Penguins' 1999 bankruptcy and sale to Lemieux's group.

Authority lawyer Tom Thompson said Balsillie's estimated worth of $1.5 billion would make the Penguins "one of the stronger franchises in the NHL from a financial standpoint."

Reaction was mixed among the standing-room-only crowd of 17,028 that watched the Penguins defeat the New York Islanders last night at Mellon Arena.

"I thought this was all done and settled," said Zach Vasilakis, of Conway, Beaver County, a partial season-ticket holder for the past decade. "Maybe Mario will keep the team now. Maybe he'll reconsider."

Season-ticket holder Thalia Shelton, of Washington, Washington County, said it was "great" that Balsillie apparently isn't buying the team.

"Even though he was saying he was going to keep the team here, a lot of people said you couldn't trust him," Shelton said.

Her husband, Bill, agreed.

"Mario should keep it," he said. "If things go right next week (with the Gaming Control Board decision), I don't see how he could lose."

Statement from Mario

Statement from Mario Lemieux

Jim Balsillie delivered a notice of termination today, and it is our understanding that he has stopped negotiating with the National Hockey League to get the necessary consent to buy the Pittsburgh Penguins.

While these developments create significant uncertainty, the Penguins organization will re-evaluate our situation after the Pennsylvania Gaming Control Board makes the decision on the awarding of the Pittsburgh gaming license.

What is clear is the best way to assure that the team remains viable and in Pittsburgh is to award the gaming license to the Isle of Capri.